Strategic metals are metals that occur naturally and found in very rare quantities, and for various reasons are a great option to invest in technology. Many industries depend on these scarce metals to make a wide range of products and they have therefore become an important input material for them because many are irreplaceable. They are used to make a products such as hybrid cars, flat screen TVs, wind turbines, computers, and cellular phones among other things. In total, there are about 17 strategic metals in the world with key examples being rhenium, dysprosium, osmium, and hafnium.
For many investors, investing in strategic metals is not a feasible option. However, if you have the means, generally a net worth of over $250,000, or liquid assets of more than $100,000, there are several ways you can gain access to this form of investment and reap benefits.
For instance, buying these metals before supply hits the market, or before the market realizes the full utility of these rare earth metals. Other investors buy while there is still enough supply of these metals before it is announced that scarcity is likely to contribute to higher prices in the future. Clever investors will therefore look at international trade issues and laws in trying to anticipate the future value of these metals.
More often than not, the evaluation of strategic metals corresponds with monitoring the performance of emerging economies such as China, India, Brazil and Russia. On the same breath, you also need to have a keen eye on periodic evaluation of other rising economies as this may help you understand the geographical issues around certain types of strategic metals.
SMH Panama experts can provide valuable data for making your decision.
If you want to invest in technology by buying strategic metals, there are different ways you can buy them. While strategic metals can be bought in physical form, which we recommend, you’ll find other less desirable options on the market.
For example, stocks in mining companies and other companies participating in the supply chain of these metals. You can also choose to use exchange traded funds (ETFs), indices, or any other kind of fund that capitalizes on changes in value of strategic metals. Many of these will be based on the value of the metal so that any change in value corresponds to the change in valuation of the same.
However, be sure to look at any management fees or any other costs that can affect the yield for a particular fund, as well as how the value of the fund is based on the value of strategic metals.
Also, unlike physical metals, when you purchase mining stocks, ETFs, etc, the value is easier to manipulate, can be based on emotion, and tends to follow stock prices. In our opinion, avoiding these pitfalls is one of the primary reasons to look at strategic metals at all.
Physical metals ownership is free from the emotional aspects and value manipulation driving the stock market. Prices are set through actual negotiations between buyers and sellers, so values are based on real supply and demand. This makes physical metals ownership a better move for asset protection than any of the alternative methods of trying to profit from these metals.
But why invest in strategic metals in the first place? One of the reasons why investing in these metals make perfect sense is the growing demand. Strategic metals are used in approximately 90% of industries and 95% of products. This makes strategic metals a critical component of life as we know it today.
Secondly, there is decreasing supply of these metals. These metals are already in short supply at the moment and further shortages are projected as demand continues to rise. Currently, China controls most of the existing supply and the country is interested in raising prices even further.
The third and most important reason is that these metals play a critical role in emerging technologies. These metals are not only essential in the pharmaceutical, clothing and alloys industries, but also important in the next phase of technology as we have seen above, particularly in the green energy sector. Many companies cannot invest in technology without these metals, highlighting just how important strategic metals are.
Strategic metals are essential to tomorrow’s technology and marketplace. Some of these metals are needed for companies dealing in green technologies, while many others also play a critical role in conventional industries for defense projects, buildings, and medical uses among other things. As an investor, it pays to look keenly at which metals will be significantly more valuable than others as the global supply and demand continue to change. Anticipating these changes and preparing for them adequately is a good way of making a portfolio perform well.